There is only one reason. People are trying to turn crypto into another Wall Street. The brand positioning is completely wrong. The influencers in the crypto space are telling people they can make money in crypto. They are appealing to people's greed.
And yes, a jolt of that is needed, and focusing on that might produce some wins in the short term. But there is a severe loss in the long term. Let me explain.
When I first got started in crypto, I believed crypto had an inverse relationship with Wall Street. This means if Wall Street bleeds, it is to crypto's advantage. I believed it. I remember arguing that stance with a colleague. Not too long after that argument, I was humbled. Stocks went red and bitcoin followed. Stocks recovered, bitcoin didn't. I had to rethink my ideology.
In my book, Crypto Investing Strategies for Non-Greedy People, this was one of the points. There is a lot of institutional capital in bitcoin which makes its fate not too different from stocks (or stonks, as it is fondly called). But most people in crypto don't like to accept this fact. This brings me to a very controversial statement:
If the world economy collapses today, bitcoin (and other cryptocurrencies) will follow.
They will keep going down together until it gets to a certain point (which I don't know) that the inverse relationship is going to kick in. And I would bet that the point where you would start to see an inverse relationship between stocks and bitcoin would be below $20k. And I think I am being generous.
Ask yourself this question; how many people have bitcoin (and cryptocurrencies) but do not own any stocks, bonds, or fixed income asset? If push comes to shove, would you sell your bitcoin first or your real estate property?
You can begin to see where this is going. But I have no intention of going down that rabbit hole. Let's talk about how things can be different.
I had a discussion with the founder of a crypto project. He is smart and enthusiastic about the potential of the crypto space in general. His project is a DAO and it is quite an exciting one. But when we had our chat, it was obvious that there was a gap.
He told me they raised more than the amount they needed by sending just one email. And this is a good sign. But let's not forget where that money is coming from. Anyway, that is another subject of discussion entirely. The real deal is this question I asked him:
He has a fine vision. But so does everybody else who starts a crypto project. And the vision can be so intoxicating that you forget today. He told me all the wonderful things about his project and some parts of it are truly amazing. But there is a BIG "BUT"...
The average person cannot tell the difference. And if you think the average person is going to sit down to watch you talk about your wonderful crypto project for 60 minutes, you are kidding yourself. We live in the TikTok age, remember? You have 5 seconds.
This is way more powerful than most people think. Way too powerful. If the average person can't tell the difference, it is dead on arrival. The founders may not know it yet, but it is dead on arrival. I will give you an example.
Several months back, I was chatting with a friend that is a casual crypto trader. I heard Solana was the third most valuable cryptocurrency. I wasn't so current in the crypto space then, so I asked my friend about Solana. I never heard of them in 2018 and 2019 when I was neck-deep in crypto. So, how can they be the raving thing now?
Turns out the project started in 2019. No disrespect, but I asked my friend, "so they have not experienced a serious bear market?" His answer was "yes". That was all I needed to hear. Go through a serious bear market and come out stronger, then you will have my respect. This is why we need the crypto bear market. And we need it to be long and tough.
The reason most projects fail the bear market test is that the founders want to be right, not successful. Everybody wants to create their own coin. That is not how an alternative financial institution is built. We should focus on building on what already exists, not trying to dig another foundation. Here is the billion-dollar question for you:
Not to the moon. Not to the next bull price target. Forget about countries adopting bitcoin, and whether the IMF likes it or not. The question is how can we flip a fundamental aspect of everyday economic life from USD to bitcoin? If what you are building cannot come out stronger after a 20-month bear market, then is it worth building?
So, let's conclude. Crypto has a branding problem. Bitcoin has a positioning problem. There is no argument for crypto that appeals to the everyday person that is not tied to greed. That is the big problem. Solve that, and a whole new world awaits.
When crypto influencers say things like, "most people don't get it", they say it with such honor and confidence like it is a good thing. And it is not. If most people don't get it, that is a serious problem.
If the solution to the "corrupt" financial system is complex, then it is not a solution.
The solution that the everyday person will adopt has to be simple.
And there is another problem with the crypto industry. There are no thought leaders in the space. There are only bullish and bearish voices. If bitcoin and crypto will live up to their potential, there must be more pragmatic leaders (that are builders, not investors) in the industry.
So, crypto still has a long way to go to become the alternative financial system we all want it to be. And what the space needs is less hype, less emotion, and more intelligent conversations by people who are not attached to the price surge and drop.
The crypto industry needs mature branding. I believe it has the chance of changing the world beyond what anyone is thinking right now. This is because money runs the world. And when you change the money that runs the world, the way the world is run is bound to change.
I rest my case.